Hitachi’s Philippines Site to Receive New Mission in Hard Drive Manufacturing
Wed 21 March, 2007

Consolidation of Manufacturing for Key Hard Drive Component Creates "Center of Competency " in Laguna

LAGUNA, Philippines, March 22, 2007 – As part of a series of manufacturing and development consolidations designed to achieve business excellence, Hitachi Global Storage Technologies (Hitachi) today announced that its Laguna, Philippines site is receiving a new mission as the global center of competency for slider* manufacturing. The new mission builds upon Laguna's existing slider manufacturing capacity, making it Hitachi's primary producer for this extremely critical piece of the hard disk drive (HDD) system.

Currently, the Laguna site produces roughly 20 percent of Hitachi's sliders. Last year, the facility reached a critical time-to-market milestone by improving manufacturing turn-around time three fold over a three-year period. Given this high level of specialization and technical expertise, the Laguna site is well suited to becoming a center of competency. To prepare for the additional slider capacity, site personnel will undergo additional training, totaling an estimated 94,000 man hours and within two years, the facility will triple its slider capacity, producing 85 percent of Hitachi's slider requirement. With this demonstrated level of expertise and operational efficiency, the Laguna slider center of competency is poised to make an even greater impact on Hitachi's time-to-volume capabilities.

"Consolidation of our global manufacturing and development will result in significant benefits to Hitachi, our Philippines operation and our ties to the local community. Sliders represent a very complex component of the hard drive and require a high level of expertise to manufacture. Our ability to transfer this mission to the Philippines is based in part on the availability of such a highly-skilled local workforce," said Kanji Nakao, Philippines general manager, Hitachi Global Storage Technologies.

The majority of Hitachi's slider manufacturing is now done at the company's Guadalajara, Mexico plant. Hitachi is expected to complete its slider manufacturing mission transfer from Guadalajara to Laguna in the second quarter of 2008. As a result of taking on a greater role in manufacturing sliders, the Laguna facility will transfer its 2.5-inch automotive HDD manufacturing to Thailand and move its head-gimbal assembly (HGA) production to Hitachi's mega-manufacturing sites in China and Thailand .

Centers of Competency

Manufacturing and development consolidation is one of the top initiatives Hitachi is undertaking to achieve long-term business health and to underscore the company's commitment to the hard drive business.

Through the planned consolidations, Hitachi will create "centers of competency" for the development and production of sliders, HGA and media – three of the most critical components in the manufacturing of HDDs. The following consolidations comprise Hitachi's new manufacturing/development strategy, which is expected to be completed by the end of 2008:

Manufacturing consolidation

• Laguna, Philippines – increases existing slider manufacturing to become Hitachi's center of competency for the production of sliders. Consequently, Hitachi will phase out its slider manufacturing facility in Guadalajara, Mexico by the middle of 2008.
• Shenzhen, China – increases existing media manufacturing to become Hitachi's media center of competency. As a result, Hitachi will phase out its media manufacturing operation in Odawara, Japan by the fourth quarter of 2007. Hitachi's Shenzhen operations will also become the center of competency for HGA manufacturing.
• Prachinburi, Thailand – receives new mission for manufacturing 2.5-inch automotive hard disk drives and increases existing HGA production.
• San Jose, California – retains media manufacturing, complementing media production in Shenzhen.

Development consolidation

• Odawara, Japan – becomes the center of competency for slider development.
• San Jose, California – becomes center of competency for media development.

Boosting Mega-manufacturing

Locating these centers of competency near Hitachi's final HDD-assembly plants in Thailand and China will streamline operations and advance Hitachi's mega-manufacturing concept. This concept is based on the premise that greater levels of efficiencies can be gained by placing the whole manufacturing supply chain in a central hub.

Close proximity between the component- and final-HDD manufacturing facilities shortens cycle times and minimizes shipping costs – both of which can have a great impact on Hitachi's ability to deliver products with time-to-market and time-to-volume leadership. Hitachi's mega-manufacturing strategy also advances the efficiency of customers, whose manufacturing facilities are also predominantly based in Asia .

Efficiencies, Productivity & Cost Reduction

Hitachi will realize nearly $300 million in savings as a result of its planned manufacturing and development changes. This will come about through reductions in workforce, capital expenditure and other operational expenses.

Hitachi expects to reduce its roughly 40,000-person global workforce – both regular employees and contractors – by some 11 percent as a result of the closure of its Guadalajara plant.

Non-cost related benefits of Hitachi's consolidation plan will be evident in the more efficient and productive manufacturing process – from component manufacturing to final hard-drive assembly. These efficiencies are expected to result in a shortened manufacturing process, higher product yields, less scrap and greater customer satisfaction.

_{* On a hard drive, the head-gimbal assembly is the arm that carries the slider, which in turn holds the read/write head; the media is the disk or platter upon which data is written.}

About Hitachi Global Storage Technologies

Hitachi Global Storage Technologies is a storage technology leader, founded in 2003 through the combination of Hitachi's and IBM's hard disk drive businesses. Hitachi GST enables users to fully engage in the digital lifestyle by providing high-value hard drives in formats suitable for the office, on the road and in the home.

With its legacy in hard drive invention, Hitachi GST led the industry in celebrating the hard drive's golden anniversary in 2006. After five decades of innovation, the hard drive has had a profound effect on the computing and consumer electronics industries. That heritage lives on at Hitachi GST through products that define the standard for hard drive miniaturization, capacity, performance and reliability.

Hitachi GST offers a comprehensive range of hard drive products for desktop computers, high-performance servers, notebooks and consumer devices. For more information, please visit the company's web site at www.hitachigst.com.

About Hitachi, Ltd.

Hitachi, Ltd., (NYSE: HIT / TSE: 6501), headquartered in Tokyo, Japan, is a leading global electronics company with approximately 356,000 employees worldwide. Fiscal 2005 (ended March 31, 2006 ) consolidated sales totaled 9,464 billion yen ($80.9 billion). The company offers a wide range of systems, products and services in market sectors including information systems, electronic devices, power and industrial systems, consumer products, materials and financial services. For more information on Hitachi, please visit the company's website at http://www.hitachi.com.